Hi, can someone help me to solve this problem based on the information below

Assuming Tottenham Hotspur, plc. continues in their current stadium following their current player strategy.

a. Perform a discounted cash flow (DCF) analysis using the cash flow projections given in the case. Based on this DCF analysis, what is the value of Tottenham Hotspur, plc.?

b. At its current stock price of 13.80, is Tottenham fairly valued?

Exhibit 4 2007 Tottenham Balance Sheet (millions of pounds)
Assets
Current assets:
Cash and equivalents	26.29
Investments, available for sale	0.63
Inventory - Merchandise	1.17
Accounts Receivable	19.99
Total current assets	48.07
Property and equipment, net	55.78
Intangible assets, net	49.35
Total assets	153.20
Liabilities and Stockholder Equity
Current liabilities:
Accounts payable	64.40
Total current liabilities	64.40
Long-term debt and deferred interest, net of current portion	43.08
Total liabilities	107.48
Total stockholders (deficit) equity	45.73
Total liabilities and stockholders equity	153.20
Shares Outstanding (millions of shares)	9.29
Market Capitalization	128.20

Exhibit 1 Basic Information 1 20-Year Risk Free Rate 4.57% Tottenham Equity Beta 1.29 Company Tax Rate 35% Source: Bloomberg, accessed September 2008. Exhibit 2 Team Valuations, Revenues, and Records (December 31, 2007) Team Enterprise Value (EV)a Net Debt/EV Revenue Operating Incor Arg. Points (1998-2007) Avg. Net Goals (1998-2007) Manchester United 934 0.84 169 50 82 42.7 Arsenal 588 0.53 134 11 77 38.1 Chelsea 345 0.28 154 -20 74 33.9 Liverpool 291 0.18 123 20 67 24.6 Newcastle United 167 0.46 87 6 53 2.3 Tottenham Hotspur 156 0.12 75 5 51 -1.9 Everton 106 0.32 58 -8 49 -4.9 Aston Villa 90 0.16 50 -11 51 0 Enterprise Value - Equity + Debt - Excess Cash. Source: Compiled from Forbes.com, "Soccer Team Valuations," http://www.forbes.com/lists/2007/34 biz_07soccer_Soccer-Team-Valuations_Rank.html, accessed August 2008 2008 2016 10 Other A B D E F G H I J K L M N 0 1 209-059 -12- 2 Exhibit 5 Tottenham Pro Forma Income Statement (millions of pounds) 3 Current Forecast 4 0 1 2 3 4 5 6 7 8 9 10 11 12 13 5 Revenue 2007 2009 2010 2011 2012 2013 2014 2015 2017 2018 2019 2020 6 Attendance 17.40 18.97 20.67 22.53 24.56 26.77 29.18 31.81 34.67 37.79 41.19 44.90 48.94 50.90 7 Sponsorship 15.70 17.11 18.65 20.33 22.16 24.16 26.33 28.70 31.28 34.10 37.17 40.51 44.16 45.93 8 Broadcast 28.70 31.28 34.10 37.17 40.51 44.16 48.13 52.46 57.19 62.33 67.94 74.06 80.72 83.95 9 Merchandise 5.20 5.67 6.18 6.73 7.34 8.00 8.72 9.51 10.36 11.29 12.31 13.42 14.63 15.21 7.10 7.74 8.44 9.19 10.02 10.92 11.91 12.98 14.15 15.42 16.81 18.32 19.97 20.77 Total 74.10 80.77 11 88.04 95.96 104.60 114.01 124.27 135.46 147.65 160.94 175.42 191.21 208.42 216.76 Operating Costs 12 13 Payroll 50.92 56.01 61.62 67.78 74.56 82.01 90.21 99.23 109.16 120.07 132.08 145.29 159.82 166.21 14 Stadium Operating Expenses 16.38 17.04 17.72 18.43 19.16 19.93 20.73 21.55 22.42 23.31 24.25 25.22 26.22 27.27 15 Other 1.80 1.87 1.95 2.02 2.11 2.19 2.28 2.37 2.46 2.56 2.66 2.77 2.88 3.00 Total 69.10 74.92 81.28 88.23 95.82 104.13 16 113.22 123.16 134.04 145.95 158.99 173.28 188.92 196.48 EBITDA 5.00 5.85 6.76 17 7.73 8.77 9.88 11.06 12.30 13.61 14.99 16.43 17.93 19.49 20.27 18 Depreciation 2.20 2.29 2.38 2.47 2.57 2.68 2.78 2.90 3.01 3.13 3.26 3.39 3.52 3.66 2.80 3.56 4.38 5.26 6.20 7.21 8.27 9.41 10.60 11.86 13.17 14.55 15.97 16.61 20 Interest 2.26 2.46 2.69 2.93 3.19 3.48 3.79 4.13 4.50 4.91 5.35 5.83 6.36 6.61 21 Taxes 0.19 0.38 0.59 0.82 1.05 1.30 1.57 1.85 2.13 2.43 2.74 3.05 3.37 3.50 22 Net Income 0.35 0.71 1.10 1.52 1.96 2.42 2.91 3.43 4.52 5.09 5.66 6.25 6.50 Source: Compiled from company annual report 2007, http://admin.tottenhamhotspur.com/uploads/assets/docstore/old/tottenham_ar07.pdf, accessed August 2008, as well as internal company 23 reports. 19 EBIT 3.96 Exhibit 1 Basic Information 1 20-Year Risk Free Rate 4.57% Tottenham Equity Beta 1.29 Company Tax Rate 35% Source: Bloomberg, accessed September 2008. Exhibit 2 Team Valuations, Revenues, and Records (December 31, 2007) Team Enterprise Value (EV)a Net Debt/EV Revenue Operating Incor Arg. Points (1998-2007) Avg. Net Goals (1998-2007) Manchester United 934 0.84 169 50 82 42.7 Arsenal 588 0.53 134 11 77 38.1 Chelsea 345 0.28 154 -20 74 33.9 Liverpool 291 0.18 123 20 67 24.6 Newcastle United 167 0.46 87 6 53 2.3 Tottenham Hotspur 156 0.12 75 5 51 -1.9 Everton 106 0.32 58 -8 49 -4.9 Aston Villa 90 0.16 50 -11 51 0 Enterprise Value - Equity + Debt - Excess Cash. Source: Compiled from Forbes.com, "Soccer Team Valuations," http://www.forbes.com/lists/2007/34 biz_07soccer_Soccer-Team-Valuations_Rank.html, accessed August 2008 2008 2016 10 Other A B D E F G H I J K L M N 0 1 209-059 -12- 2 Exhibit 5 Tottenham Pro Forma Income Statement (millions of pounds) 3 Current Forecast 4 0 1 2 3 4 5 6 7 8 9 10 11 12 13 5 Revenue 2007 2009 2010 2011 2012 2013 2014 2015 2017 2018 2019 2020 6 Attendance 17.40 18.97 20.67 22.53 24.56 26.77 29.18 31.81 34.67 37.79 41.19 44.90 48.94 50.90 7 Sponsorship 15.70 17.11 18.65 20.33 22.16 24.16 26.33 28.70 31.28 34.10 37.17 40.51 44.16 45.93 8 Broadcast 28.70 31.28 34.10 37.17 40.51 44.16 48.13 52.46 57.19 62.33 67.94 74.06 80.72 83.95 9 Merchandise 5.20 5.67 6.18 6.73 7.34 8.00 8.72 9.51 10.36 11.29 12.31 13.42 14.63 15.21 7.10 7.74 8.44 9.19 10.02 10.92 11.91 12.98 14.15 15.42 16.81 18.32 19.97 20.77 Total 74.10 80.77 11 88.04 95.96 104.60 114.01 124.27 135.46 147.65 160.94 175.42 191.21 208.42 216.76 Operating Costs 12 13 Payroll 50.92 56.01 61.62 67.78 74.56 82.01 90.21 99.23 109.16 120.07 132.08 145.29 159.82 166.21 14 Stadium Operating Expenses 16.38 17.04 17.72 18.43 19.16 19.93 20.73 21.55 22.42 23.31 24.25 25.22 26.22 27.27 15 Other 1.80 1.87 1.95 2.02 2.11 2.19 2.28 2.37 2.46 2.56 2.66 2.77 2.88 3.00 Total 69.10 74.92 81.28 88.23 95.82 104.13 16 113.22 123.16 134.04 145.95 158.99 173.28 188.92 196.48 EBITDA 5.00 5.85 6.76 17 7.73 8.77 9.88 11.06 12.30 13.61 14.99 16.43 17.93 19.49 20.27 18 Depreciation 2.20 2.29 2.38 2.47 2.57 2.68 2.78 2.90 3.01 3.13 3.26 3.39 3.52 3.66 2.80 3.56 4.38 5.26 6.20 7.21 8.27 9.41 10.60 11.86 13.17 14.55 15.97 16.61 20 Interest 2.26 2.46 2.69 2.93 3.19 3.48 3.79 4.13 4.50 4.91 5.35 5.83 6.36 6.61 21 Taxes 0.19 0.38 0.59 0.82 1.05 1.30 1.57 1.85 2.13 2.43 2.74 3.05 3.37 3.50 22 Net Income 0.35 0.71 1.10 1.52 1.96 2.42 2.91 3.43 4.52 5.09 5.66 6.25 6.50 Source: Compiled from company annual report 2007, http://admin.tottenhamhotspur.com/uploads/assets/docstore/old/tottenham_ar07.pdf, accessed August 2008, as well as internal company 23 reports. 19 EBIT 3.96